Texas land prices up again

By Jennifer Hiller

Updated 11:17 pm, Thursday, April 19, 2012

SAN ANTONIO — Buying a slice of Texas just keeps getting more expensive.

The average price of a Texas acre rose to $2,150 in 2011, up 3 percent over the previous year, according to the Real Estate Center at Texas A&M University, which Thursday kicked off its annual two-day Outlook for Texas Land Markets conference in San Antonio.

Land prices have been rising generally since the 1990s. Prices swooned slightly in 2009 with the recession and still haven't regained 2008's statewide average per-acre cost of $2,247.

But institutional investors, commodity prices and the oil and gas industry have helped keep land values stable and rising.

"The price seems to be hanging in there, but the volume of activity is not what it used to be," said Charlie Gilliland, research economist at the center.

Prices rose in 2011 even as sales volume dropped. There were 4,520 rural land sales reported in 2011, down from 4,747 the year before.

That's about half of the sales volume in 2005, when baby boomers were rushing to buy rural spreads for retirement and executives wanted hunting ranches.

The projection for 2012: basically flat prices, but more land sales. And like the housing market, Gilliland said buyers will be purchasing with an "emphasis on quality."

In Houston, the health of the oil and gas industry has started something of a land rush for undeveloped neighborhood property, said Jeff Lokey, executive vice president of NewQuest Properties. As of Jan. 1, it has been "game on" for pockets of property in and near master-planned communities, he said.

"If there's not an offer on it somebody hasn't seen it yet," Lokey said.

In general across the state, farmland has been in demand with buyers, while there hasn't been as much demand for recreational property.

And the size of a Texas spread continues to drop as land gets subdivided over the generations.

The median size of a tract that sold in 2011 was 74 acres, down from 101 acres a decade before and 138 acres in 1991.

Several A&M economists sounded notes of warning Thursday, including concerns that the U.S. is headed down the same debt-crisis path as Europe.

Mark Dotzour, chief economist at the Center, said knowing how to invest is impossible. People who like to buy gold as a hedge against inflation have also been buying cropland, pasture land and assets such as apartments. But many people continue "sitting on cash doing nothing with their money," he said, because no one knows what to expect from Congress.

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